In the spring of 2004, there was widespread expectation in financial markets that the Federal Reserve would shortly begin the process of raising its federal funds rate target back toward a more normal level. Much of this concern was based on the sizable increases in long-term rates that occurred when the Federal Reserve tightened monetary policy in 1994-1995 and 1999-2000. In contrast to the co…
The evolution of the term structure of expected U.S. inflation is modeled using survey data to provide timely information on structural change not contained in lagged inflation data. To capture shifts in subjective perceptions, the model is adaptive to long-horizon survey expectations. However, even short-horizon survey expectations inform shifting-endpoint estimates that capture the lag betwee…